Developed market or developing market? A perspective of institutional theory on multinational enterprises’ diversification and sustainable development with environmental protection

Ji Li, Ying Zhang, Yanghong Hu (Corresponding Author), Xiaolong Tao, Wanxing Jiang, Lei Qi

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

Integrating previous research, we propose a theoretical model predicting the different effects of global diversification on corporate social performance in environmental protection (EP) by focusing on the institutional difference between developing and developed countries. Moreover, arguing for the moderating effects of firm resources, we also predict and test the effect of firm slack resources on the relationship between the diversification and corporate social performance in EP. By analyzing longitudinal data of 847 multinational enterprises (MNEs), we found empirical evidence that when MNEs diversify mainly into developed countries, they are likely to show more EP. By contrast, when MNEs diversify into developing countries, they are likely to show less EP. Furthermore, we found that a firm's financial slack could weaken the positive effect of diversification into developed countries and enhance the negative effect of diversification into developing countries on EP. However, a firm's human resource slack could only weaken the positive effect of diversification into developed countries on EP. We conclude with a discussion of the implications of the findings.

Original languageEnglish
Pages (from-to)858-871
Number of pages14
JournalBusiness Strategy and the Environment
Volume27
Issue number7
Early online date8 Feb 2018
DOIs
Publication statusPublished - Nov 2018

Keywords

  • developed countries
  • developing countries
  • environmental protection
  • financial slack
  • geographic diversification
  • human resource slack
  • institutional theory
  • multinational enterprises

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